TommyWonk

Friday, July 30, 2010

The Trajectory of Global Warming

Pay attention to the confidence range, which is similar to what pollsters call the margin of error. As you can see in the chart, the confidence range (which is 95 percent) is considerably smaller than the rate of change over the last several decades, which means that that it is extremely unlikely that the increase in temperatures is attributable to random fluctuations.

Wednesday, July 28, 2010

Externalities and Global Warming

The fact that carbon emissions are warming the planet doesn’t make it more expensive to produce those emissions.

That's it. The costs associated with global warming will be considerable, but will not be born by those who extract and burn fossil fuels. This is the classic definition of an externality.Leonhardt continues:

The ultimate goal of climate legislation — be it the bill that the House passed last year or the bill that died in the Senate last week — is to align the incentives better, so human ingenuity can be harnessed to fight global warming. The bills would increase the cost of emitting carbon, thereby giving companies reason to emit less. Absent that, the best bet seems to be that emissions will keep rising and the planet will keep getting hotter.

That was then, this is now, and McCain is in the midst of a primary fight against a hard right opponent. Matt Yglesias calls them the "the mysterious vanishing Republican cap-and-trade supporters." Yes there are some Democrats who represent coal or oil states and have been reluctant to support acting on climate change, and I imagined that it would be necessary to throw a few billion dollars for "clean coal" technology their way to keep them happy. But after Lindsay Graham abandoned the effort to control greenhouse gas emissions, not a single Republican senator was willing to even discuss action on global warming.

Ironies abound. A century ago, Theodore Roosevelt was our first environmental president. Russ Peterson was a Republican when he pushed through the Coastal Zone Act. The cap and trade approach was developed under the first President Bush to successfully reduce SO2 emissions. Unfortunately, the GOP is now the party of obstruction when it comes to protecting the planet.

The levees and dikes that hold in fresh water to create waterfowl habitat and protect communities like historic Old New Castle from flooding wouldn't stand up to a 3-feet rise in sea level, according to a scientist who worked on a climate change report issued Wednesday by the Partnership for the Delaware Estuary.

For New Castle, an estimated 25 percent of the city's populated areas would be flooded if all four of its dikes -- Buttonwood and Broad dikes in the northern part of the city, Gambacorta Marsh on the south side of Battery Park and Army Creek, which is partially outside the southern city limits -- failed, according to a recent engineering report.

The report, which can be found here, focuses on the impacts on tidal wetlands, drinking water and bivalve shellfish. It does not attempt to measure all of the most significant impacts on the watershed.

Water and sewer facilities, including Wilmington’s wastewater treatment plant, which serves most of New Castle County, will be inundated. If I-95, I-495 and Amtrak’s northeast corridor are flooded, the major transportation links serving Wilmington and linking Washington and New York will be lost.

Wednesday, July 21, 2010

Goldman Sachs and Market Volatility

News from the corporate earnings front illustrates why the financial reform bill (which President Obama will sign today) is needed. The bill includes a fairly strong version of the Volcker rule, named for former Federal Reserve chairman Paul Volcker, which limits the of banks to trade on their own accounts. In other words, a firm can either be a bank or a hedge fund, but not both.

Goldman’s traders have long aroused envy across Wall Street for their ability to prosper in markets good and bad, but they lost the Midas touch in the spring, especially when it came to trading stocks. As clients bet on rising volatility, Goldman took the other side of the trade, leaving it on the losing end when volatility did in fact surge.

The market has been unusually volatile this year. The S&P 500 has moved up or down 1 percent or more six times in the last month. Goldman is a component of the S&P 500, so its share prices, which climbed or fell 1 percent or more ten times in the last month, contribute to the current volatility. Goldman was not even a publicly traded company until 1999, when the partnership structure was scrapped and shares were publicly traded for the first time. The purpose of the IPO was to raise capital for the firm's trading desk. The net effect is that Goldman's trading activity amplifies the market's volatility.

Friday, July 16, 2010

NRG Agrees to Close 3 Coal Burning Units

DNREC announced earlier this year that it was negotiating with NRG to shut down Unit 3 of the Indian River Power Plant by the end of 2013. NRG had already agreed to shut down Units 1 and 2 and install new controls on Unit 4. Yesterday, Governor Jack Markell and Secretary Collin O'Mara announced that a consent agreement has been reached to close the three coal burning units and invest in clean energy jobs. The News Journal reports that at least one environmental advocate likes the deal:

"It's an excellent thing, from my point of view," said Joanne Cabry of Rehoboth Beach, who was among lawmakers and environmental activists briefed on the agreement Wednesday night. "I'll take the fish kills and the pollution for another year or two if they close it permanently. Every time they can close one of those units down there, that's great."

According to the 2008 Toxic Release Inventory, the Indian River and Edge Moor/Hay Road coal burning power plants together accounted for 75 percent of air emissions in 2008. Calpine, which bought the Edge Moor/Hay Road facilities in April, announced that it would stop burning coal there. Together, these decisions mean that overall air emissions in Delaware will be drastically curtailed over the next three years.

The agreement further includes a commitment from NRG to bring wind, solar and electric vehicle jobs and training programs to Delaware.

Thursday, July 15, 2010

EDEN Fundraiser Friday in Milton

The Delmarva Community Wellnet Foundation is holding a fundraising event for the EDEN (Energize Delaware Now) project this Friday night at the Milton Theater. Collin O'Mara is the keynote speaker.

EDEN, which promotes green entrepreneurship, environmental education and sustainable markets, is led by some veteran activists, including Kim Furtado, whom I got to know through Citizens for Clean Power.

If you live down in Sussex or are going down for the weekend, head on over. Tell 'em TommyWonk sent you.

Wednesday, July 14, 2010

A Utility Only Carbon Emissions Bill

The Washington Independent has posted some slides from a PowerPoint presentation on a utility-only carbon emissions bill proposed by Senator Jeff Bingaman (D-New Mexico) with Olympia Snowe (R-Maine). The bill would reduce CO2 emissions from utilities by 17 percent by 2020, 42 percent by 2030, and 50 percent by 2035: Coal power would flatten out and start to decline in about 15 years: A very rough discussion draft of the bill can be read here. The dilemma for environmentalists is whether half a loaf is worth supporting given that a full loaf may not be available this year or next.

Joshua M. Sharfstein, the FDA's principal deputy commissioner, said antibiotics should be used only to protect the health of an animal and not to help it grow or improve the way it digests its feed.

You and I need a prescription for antibiotics, but farmers can simply add it to animal feed:

U.S. farmers routinely give antibiotics to food-producing animals to treat illnesses, prevent infection and encourage growth. The drugs are often added to drinking water and feed. The Union of Concerned Scientists estimates that 70 percent of antibiotics and related drugs used in the United States are given to animals.

Many of the same classes of drugs fed to animals are deemed "critically" important in human medicine by the FDA, including penicillin, tetracyclines and sulfonamides. In recent years, public health experts say there has been an alarming increase in the number of bacteria that have grown resistant to antibiotics, leading to severe, untreatable illnesses in humans.

The farmers are pushing back:

"Show us the science that use of antibiotics in animal production is causing this antibiotic resistance," said Dave Warner of the pork council. "How do we know [the problem] is not on the human side? Where is the science for you to go forward on this?"

In other words, how do we know that human use of antibiotics isn't making the pigs sick?

Friday, July 09, 2010

Could PACE Financing Hurt Homeowners?

A big problem with investing in home based renewable energy systems is the length of time required to realize the payoff. Even though such systems reduce the need to buy power from the grid, it's hard for homeowners to capture the savings quickly enough to justify financing the cost.

One solution to this conundrum is called the Property Assessed Clean Energy, or PACE, which adds publicly sponsored loans added to property tax bills to finance renewable energy investments. My friend Tom Konrad at Clean Energy Wonkdescribes the benefits:

PACE financing is an important program that addresses multiple barriers to energy efficiency. First, it addresses upfront cost: although energy efficiency measures usually pay for themselves, most require an up-front investment which many people have trouble making. PACE financing also helps address split incentives. Because efficiency improvements can take several years to pay back, and most Americans move every few years, the benefits of efficiency don’t always accrue to the people who invest in them. With PACE, the loan used to make the improvement is assessed on the property, so the person who is saving money in energy costs is always the same person who is paying for the energy improvements.

The lending is not based on the homeowner's ability to pay, it bypasses consumer protections such as the Truth-in-Lending Act, and it may not lead to meaningful reductions in energy consumption, the FHFA [Federal Housing Finance Agency] said. It could undermine the lenders that provide home mortgages and investors in securities backed by mortgages by changing the economics of those arrangements, the FHFA said.

Konrad looks at these concerns one by one:

Ability to pay. The lending does not need to be based on the borrower’s ability to pay, because the energy improvements improve that ability to pay. For example, Boulder Colorado’s now canceled PACE program required that the homeowner first get an energy audit, which is then used to estimate the cost savings of possible energy improvements. If the homeowner is able to pay for his or her current mortgage (which, supposedly, is based on his ability to pay), then after the energy improvements and the PACE loan, he or she should have better cash flow, and be better able to pay. In other words, PACE should improve the owner’s ability to pay, and actually strengthen the mortgage market.

Consumer protections. Unlike complex mortgages, the most important thing about a PACE loan is that the monthly payment be less than the monthly savings, so they are inherently easier for consumers to understand. But if consumer protections are necessary, there’s no reason they could not be added to PACE lending programs without canceling the whole program, as the FHFA seems to want.

May not lead to meaningful reductions in energy consumption. Quite simply put, this is an attempt to throw the baby out with the bathwater. A good PACE program requires an energy audit and professional installation in order to ensure energy savings. It’s important to design PACE programs carefully, but that’s true for any lending program, or any program whatsoever.

There is nothing fundamentally wrong with the PACE approach; the question is whether the program can be effectively structured and managed to capture the economic benefits of renewable energy.

Thursday, July 08, 2010

Competition for Bluewater Wind in Delaware?

Will competition slow down NRG Bluewater Wind's plans to build offshore wind in Delaware? As Aaron Nathans reports in the News Journal, Occidental Development & Equities, LLC of New Jersey submitted a filing to the Interior Department expressing interest in six of the 31 blocks that Bluewater wants to use to build its offshore wind project about 12 miles off Delaware's beaches.

Each of these blocks is 3 nautical miles to a side. As a rule of thumb, offshore wind farms require about half a mile of elbow room between towers. A very rough calculation tells me that even if Occidental were successful in securing these six blocks, Bluewater would still have plenty of room to build out its planned wind farm and then some.

The Bureau of Ocean Energy Management, Regulation & Enforcement (formerly known as the Minerals Management Service) issued a request for expressions of interest (RFIs) earlier this year as the first step in allocating sites for offshore wind development. Responses to the RFIs will be evaluated based on the bidders' technical and financial ability to develop the sites. I do not know how meaningful Occidental's filing is, except to note that the firm was an unsuccessful bidder in New Jersey's competitive process to develop offshore wind. Its filing does not seem to pose a serious threat to Bluewater's ability to proceed with the regulatory process.

Wednesday, July 07, 2010

"Climategate" Report Finds No Data Tampering

A second independent review of the conduct of the Climatic Research Unit (CRU) at the University of East Anglia has found no misconduct that could cast doubt on the underlying science of climate change. The New York Timeshas the story:

A British panel issued a sweeping exoneration on Wednesday of scientists caught up in the controversy known as Climategate, saying it found no evidence that they had manipulated their research to support preconceived ideas about global warming.

13. Climate science is a matter of such global importance, that the highest standards of honesty, rigour and openness are needed in its conduct. On the specific allegations made against the behaviour of CRU scientists, we find that their rigour and honesty as scientists are not in doubt.

14. In addition, we do not find that their behaviour has prejudiced the balance of advice given to policy makers. In particular, we did not find any evidence of behaviour that might undermine the conclusions of the IPCC assessments....

16. On the allegation of withholding [land station] temperature data, we find that CRU was not in a position to withhold access to such data or tamper with it. We demonstrated that any independent researcher can download station data directly from primary sources and undertake their own temperature trend analysis....

21. We do not find that the way that data derived from tree rings is described and presented in IPCC AR4 and shown in its Figure 6.10 is misleading.

The review, which was conducted by an independent team of scientists, did find reason to criticize the conduct of the researchers at the CRU, but nothing that in any way undermines the IPCC's conclusions.

The first independent review, released in April, found "no evidence of any deliberate scientific malpractice." Once again, the furor over "Climategate" has failed to produce any reason to question the data on global warming.

Tuesday, July 06, 2010

TommyWonk on WDEL this Evening

Allan Loudell and I will be chatting about wind power this evening on WDEL, 1150 AM, at either 5:25 or 5:35 this evening. We will discuss the latest news on the regulatory front and, if time allows, the development of a supply chain to build wind power projects up and down the east coast.

The News Journal and Cape Gazette both ran stories over the weekend on the how delays are making it harder for NRG Bluewater Wind to stay on schedule. The permitting process for NRG Bluewater Wind was already in danger of lagging before the Minerals Management Service reorganized as the Bureau of Ocean Energy Management, Regulation and Enforcement. The delay has nothing to do with the merits of the NRG Bluewater proposal, but with the challenge of getting a bureaucracy to figure out how to deal with something it hasn't seen before, particularly when they are still moving their furniture around.

The other big challenge for the offshore wind industry is creating a supply chain to support the construction of wind farms from Virginia to Maine. Already, about 2 gigawatts of capacity is in the pipeline. A provision in SS 1 to SB 119 could help steer some of that supply chain to Delaware by providing incentives for in-state labor and manufacture for solar and wind energy.

Sunday, July 04, 2010

When in the Course of Human Events

In CONGRESS, July 4, 1776The unaminous Declaration of the thirteen united States of America,

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. —That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, —That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. —Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the consent of our legislatures. He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For Quartering large bodies of armed troops among us:

For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us, in many cases, of the benefits of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by the Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor. [New Hampshire] Josiah Bartlett, William Whipple, Matthew Thornton[Massachusetts] John Hancock, Samual Adams, John Adams, Robert Treat Paine, Elbridge Gerry[Rhode Island] Stephen Hopkins, William Ellery[Connecticut] Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott[New York] William Floyd, Philip Livingston, Francis Lewis, Lewis Morris[New Jersey] Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark[Pennsylvania] Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross[Delaware] Caesar Rodney, George Read, Thomas McKean[Maryland] Samuel Chase, William Paca, Thomas Stone, Charles Carroll of Carrollton[Virginia] George Wythe, Richard Henry Lee, Thomas Jefferson, Benjamin Harrison, Thomas Nelson, Jr., Francis Lightfoot Lee, Carter Braxton[North Carolina] William Hooper, Joseph Hewes, John Penn[South Carolina] Edward Rutledge, Thomas Heyward, Jr., Thomas Lynch, Jr., Arthur Middleton[Georgia] Button Gwinnett, Lyman Hall, George Walton

Thursday, July 01, 2010

Obama and Socialism

Here's a nugget of clarity from the News Journal account (by Beth Miller and Dara McBride) of the rather modest Tea Party demonstration outside Legislative Hall yesterday:

President Barack Obama, who is not on record as advocating socialism, was a target of most speakers.

You read it right: Obama "is not on record as advocating socialism."In other news, Mike Castle was one of three Republican representatives to vote for the financial reform bill designed to keep Wall Street from plunging us into another financial crisis. Obama yesterday pounced on House GOP leader John Boehner's comment that the reform bill was "killing an ant with a nuclear weapon," repeating the phrase with relish in a speech in Racine, Wisconsin:

The leader of the Republicans in the House said that financial reform was like — I’m quoting it — “using a nuclear weapon to target an ant.” That’s what he said. He compared the financial crisis to an ant. This is the same financial crisis that led to the loss of nearly eight million jobs. The same crisis that cost people their homes, their life savings.

There is a long tradition, going back to Teddy Roosevelt, of regulating capitalism to keep markets from raging out of control and hurting the customers and investors they are intended to serve. We still live in a capitalist system, despite — or perhaps thanks to — the reforming ways of presidents like Teddy Roosevelt, FDR and Obama.